June 7, 2016 / 3:32 PM / 2 years ago

CORRECTED-EMERGING MARKETS-Latam currencies up on dovish Yellen; Colombia peso jumps

(Corrects in fifth paragraph to say oil prices hit 8-month
    By Bruno Federowski
    SAO PAULO, June 7 (Reuters) - Latin American currencies
strengthened on Tuesday after U.S. Federal Reserve Chair Janet
Yellen refrained from setting a time frame for further interest
rate hikes.
    In a speech on Monday, Yellen did not repeat her assessment
that rate increases would be appropriate in coming months.
Nevertheless, she gave a largely upbeat assessment of the U.S.
economy and indicated further hikes were coming. 
    Emerging market currencies tend to benefit from low interest
rates abroad, which often drive foreign investors toward
high-yielding bonds.
    The Colombian peso shot up more than 2 percent, its
biggest daily gain since mid-April, and far outperformed its
    A rally in oil prices  to eight-month highs
also boosted the currency after a spate of attacks on
infrastructure in Nigeria depressed crude supply.
    The peso had been pressured after Colombia's central bank
backed off its intervention policy. However, bets that the bank
could increase rates to fight currency weakness grew following a
report showing inflation kept rising well above its long-term
    The Brazilian real strengthened 0.5 percent after
central bank chief nominee Ilan Goldfajn defended the country's
floating exchange rate in a Senate hearing. 
    "The market interpreted that as a sign that there will be
less meddling in the foreign exchange market when Ilan
(Goldfajn) takes charge," said Spinelli brokerage trader José
Carlos Amado.
    Many traders took the words as a sign that Goldfajn would
allow the currency to strengthen past 3.50 per U.S. dollar, a
milestone that often triggered intervention under the current
central bank chief.
    The real had weakened by as much as 0.7 percent in morning
trading following local news reports that Brazil's top
prosecutor had demanded the arrest of several high-ranking
    Key Latin American stock indexes and currencies at 1450 GMT:
 Stock indexes                               daily %    YTD %
                                              change   change
 MSCI Emerging Markets               837.19     1.69     3.67
 MSCI LatAm                         2142.55     1.19    15.71
 Brazil Bovespa                    50628.78     0.39    16.79
 Mexico IPC                        46230.43     0.81     7.57
 Chile IPSA                         4009.65     0.55     8.95
 Chile IGPA                        19729.34     0.49     8.69
 Argentina MerVal                  13106.86     1.98    12.26
 Colombia IGBC                      9769.51     0.38    14.30
 Venezuela IBC                     15568.64    -0.11     6.72
 Currencies                                  daily %    YTD %
                                              change   change
 Brazil real                         3.4709     0.54    13.72
 Mexico peso                        18.5565     0.60    -7.15
 Chile peso                           680.5    -0.15     4.29
 Colombia peso                      2950.19     2.23     7.43
 Peru sol                            3.3049     0.18     3.30
 Argentina peso (interbank)         13.8000     0.00    -5.92
 Argentina peso (parallel)               14     1.14     1.93

 (Reporting by Bruno Federowski; Editing by Lisa Von Ahn)
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